Dozens of financial institutions downgraded by S&P

Steve Chiotakis: Banks today are reeling, just a day after Standard & Poor's downgraded not one, not two -- but dozens of financial institutions all around the world. Here in the U.S., that includes Bank of America, Citigroup and Goldman Sachs.

And Marketplace New York bureau chief Heidi Moore reports, some people say it's a long time coming.

Heidi Moore: After the financial crisis, ratings agencies were slammed for not sounding the alarm on toxic securities that nearly took down the banking system. So, this year, Standard & Poor's announced it was going to be tougher on banks in its ratings.

The results are in: S&P downgraded dozens of banks, based everywhere from the U.S. to Argentina to Europe to China.

James Angel: So it's not as if one bank suddenly go into trouble; it's a sign that the entire banking system is in murkier waters these days.

That's James Angel, who teaches finance at Georgetown. He says downgrades are no reason to panic.

Angel: A downgrade is a signal that their reputation is not as strong as it was. So this is not, you know, clearly good news, but it's not a catastrophic end of the world.

As Italy and Greece face new troubles every day, rumors and fears about banks keep scaring the markets. So the question is this: is S&P late to the game again by warning us about banks now?

Angel: Well, you never really know, because banks are fundamentally very opaque.

Meaning, banks don't like to share every detail of what's on their books. The market has already made its decision -- several big banks have hit record lows in their stock prices this year.